Philosophy, Politics and Economic Change
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Review by Jonathan Crowe

Robert Nozick
by A.R. Lacey
New Jersey: Princeton University Press, 2001, US$17.95 (p/b) and US$55.00 (h/b) ISBN 0 691 090459

THE American philosopher Robert Nozick is best known for his controversial book, Anarchy, State, and Utopia, in which he advanced a radical libertarian account of the state. However, as A. R. Lacey observes (p. 1) in this commendably concise overview of NozickÕs philosophical writings, Nozick himself always resisted being labelled a Ôpolitical philosopherÕ. Indeed, as LaceyÕs book demonstrates, NozickÕs published work touched on a remarkably wide range of philosophical issues, including not only political philosophy and ethics, but also epistemology, the nature of rationality, and various topics in metaphysics.

LaceyÕs book is very timely, given NozickÕs recent death at the age of 63. The volume represents an attempt to summarise the main arguments advanced by Nozick throughout his philosophical career (with the exception of those contained in NozickÕs last major work, Invariances, published in 2001), while also discussing the major criticisms those arguments have received. Given the breadth of NozickÕs academic interests, this represents a formidable undertaking; Lacey, however, rises admirably to the task, moving smoothly and knowledgeably between topics as diverse as the moral basis of the state, the metaphysics of personal identity, and spiritual approaches to the meaning of life.

This is a well-written book. LaceyÕs prose is dense with information, while remaining clear and concise throughout. The book as a whole is intuitively organised; Lacey sensibly accords more prominence to NozickÕs more critically recognised arguments (the first two substantive chapters are devoted to Anarchy, State, and Utopia), and takes pains to stress recurring concepts in the earlier chapters. Similarly, the authorÕs use of references is excellent; there is an extensive bibliography, and a useful ÔGuide to Further ReadingÕ, organised according to chapter. The short summaries included by Lacey at the end of each chapter further enhance the bookÕs already tight structure.

The book commences with an interesting introductory chapter, in which the author examines the different approaches to philosophical writing taken by Nozick over the course of his career. In particular, Lacey documents NozickÕs shift in later life toward a less argumentative, ÔexplanatoryÕ approach to philo-sophical reasoning, and discusses his controversial condemnation of traditional philosophical argumentation as overly coercive. Appropriately, Lacey gives full weight to the rather devastating criticisms which have been levelled at this aspect of NozickÕs later work, while also giving sympathetic consideration to the concerns which Nozick raises about traditional methods of philosophical argument.

The rest of the book is devoted to summarising NozickÕs views on various important philosophical questions, and canvassing the main criticisms levelled against them. Despite the diversity of the topics covered by NozickÕs writings, Lacey, himself a professional philosopher, is not inclined to shy away from detail. The authorÕs incisive and well-researched treatment of each individual area of NozickÕs work is one of this bookÕs undoubted merits. Paradoxically, however, this attention to detail also represents the bookÕs most striking shortcoming, for it means that even the most dedicated layperson is likely to find the more technical chapters quite difficult to follow.

In the preface (p. vii), Lacey expresses the hope that his book will provide Ôthe student or interested laymanÕ with an accessible overview of NozickÕs philosophy. (He adds that, to this end, he has omitted discussion of some of NozickÕs Ômore technical workÕ). Despite the precision of LaceyÕs writing, however, his commendable aim of producing an accessible general introduction to NozickÕs philosophical writings remains largely unfulfilled. The diversity of the topics which NozickÕs work covered, coupled with the technical nature of significant parts of the material, ensures that the lay reader who wishes to obtain a genuine overview will need to bring very considerable patience, and not a little philosophical aptitude, to her or his perusal of LaceyÕs book.

For this reason, LaceyÕs work is not as well-suited as a general overview for the student or layperson as the author appears to desire. It is, however, excellently adapted for two other roles: it provides the graduate student or professional philosopher with a concise, well-referenced overview of NozickÕs philosophy; and it serves as a useful resource for the student or layperson who wishes to explore in some depth a particular area of interest in NozickÕs work. Readers of Policy, for example, who would like to acquaint (or re-acquaint) themselves with NozickÕs political views, will be hard pressed to find a better basic summary than that in chapters 2-4 of LaceyÕs book.

Lacey appears to view his book as an attempt to demonstrate a degree of unity in NozickÕs philosophy as a whole; to this end, he attempts at various junctures to identify recurring themes in NozickÕs work. In this endeavour, again, the author meets with limited success. As Lacey acknowledges (p. 170), both the breadth of NozickÕs philosophical concerns and his lifelong reluctance to engage directly with his previous work make any overall unity difficult to find. Where Lacey does succeed, however, is in highlighting two or three key concepts which Nozick utilises in several different philosophical contexts (an example is the idea of ÔtrackingÕ, which appears in his analyses of knowledge, rationality, and personal identity). This provides an interesting insight into NozickÕs favoured methodologies for solving philosophical problems, if not quite achieving LaceyÕs aim of demonstrating Ôthe unity of NozickÕs philosophyÕ (p. 17).

Lacey has produced an admirable treatment of a challenging subject. If, in the end, his book does not quite live up to its stated aims, this is not entirely the authorÕs fault; to summarise and unify NozickÕs diverse and occasionally obscure body of work in a concise and accessible format was always an ambitious task. Despite the difficulty of some of the material, it is hoped that enough readers will persevere with LaceyÕs volume to ensure that Nozick is rightly remembered as one of the most original and multi-faceted philosophers of his time.

Review by Alex Robson

The Transfer Society
by David N. Laband and George C. McClintock
Washington DC: The Cato Institute, 100pp, 2001, $US8.95, ISBN 1 930 86511 2

ECONOMISTS are well acquainted with Adam SmithÕs invisible hand story of how free, decentralised markets act as a catalyst for wealth creation. They are also familiar with the standard deadweight cost measures of various redistributive interventions such as taxes, subsidies, price/quantity controls, artificial barriers to entry, and other regulations. Standard economic analysis concludes that these programmes destroy consumer and producer wealth only to the extent that they divert economic resources from high valued to low valued uses. The fact that such diversions are almost always vigorously pursued or opposed by certain individuals or groups of individuals is usually ignored.

We are only just beginning to systematically study and understand the process of how and why resources are directed towards establishing, preventing, sustaining, modifying and abolishing wealth redistribution programs and institutions.1 These activities have been referred to by various authors as Ôrent-seekingÕ, Ôinvisible footÕ and Ôblack holeÕ activities.

One of the main conclusions of this theoretical work is that the resources aimed at influencing the distribution of wealthÑand which do not (either directly or indirectly) create wealthÑshould be added to standard deadweight costs to arrive at an overall measure of the welfare cost of redistributive programmes. But while the modern analysis of the rent-seeking society, beginning with Gordon Tullock in 1967, has spawned a voluminous literature, rent-seeking is still not included in the standard undergraduate economics curriculum in most universities. One possible explanation is that the costs of these activities are not large enough to concern welfare economists. In The Transfer Society, David N. Laband and George C. McClintock investigate this hypothesis by estimating the dollar costs of rent-seeking in the United States in the year 1997.

Laband and McClintock estimate the cost of rent-seeking in the United States at US$546 billion (at 1997 prices). On the one hand, this seems small, relative to the overall size of the US economy. On the other hand, consider the following crude calculation: at current exchange rates, and ignoring inflation between 1997 and 2001, the Laband-McClintock costs amount to AU$1060 billion. According to recent Australian Bureau of Statistics data, Australian GDP as at June 2001 was AU$641 billion at current prices. Therefore, approximately 12/3 of AustraliaÕs GDP was destroyed in 1997 in the United States because resources were directed towards establishing, preventing, sustaining, modifying and abolishing wealth redistribution programmes and institutions. AndÑas Laband and McClintock acknowledgeÑthis is a lower bound!

The book is an excellent introduction for readers who are familiar with the concept of rent-seeking activities, but who might be unaware of the magnitude and extent of rent-seeking in modern economies. Consider, for example, the costs of legal and illegal direct transfers which Laband and McClintock include in their analysis: organised crime, white collar crime, investigations of personal crime, national defence, police, protection against fraud, vehicle, housing, and other locks, insurance against crime, burglar alarms and computer security. And in the costs of legal and illegal indirect transfers they include political action committees, lobbyists, tort litigation, contested divorce, bankruptcy proceedings, strikes, restricting entry into occupations, tax loopholes, smuggling, enforcement of the tax code, and antitrust enforcement.

One very interesting calculation is made at the end of the book to illustrate their findings: Laband and McClintock calculate that the vast majority of lawyers (over 600,000 in a total of 880,000) make absolutely no contribution to productive economic activities in the United States. My only criticism of computing a figure like this (and with the rest of the book) is that it does really not go far enough in telling us about the nature and extent of the problem. Rent-seeking costs might be large or smallÑthis is certainly useful information. But the real problem is that in every modern society where majority political opinion is bestowed with virtually unlimited powers of coercion, growth in the size of rent-seeking activity has rivalled, and in many cases exceeded real economic growth, and this trend continues unabated.

For example, Richard EpsteinÕs Simple Rules for a Complex World (1995) provides preliminary details of the growth of invisible foot activities in the United States in the 20th century by examining the share of US GDP that is devoted to expenditure on lawyers. From 1960 to 1987, this share doubled: invisible foot activities continue to grow faster than invisible hand activities. Thus, while Laband and McClintock have performed a great service in documenting the static costs of these activities, their analysis does not fully characterise the problems inherent in the transfer society. Reviewed by Alex Robson Endnotes 1 An excellent overview of recent research is provided in Stergios Skaperdas and Michelle Garfinkel (eds), The Political Economy of Conflict and Appropriation, (New York: Cambridge University Press, 1996).

Review by Andrew Norton

Inspiring Economics: Human Motivation in Political Economy
by Bruno Frey
Edward Elgar, 2001, 236pp, £55 ISBN 1 840 64 205 X

LAST Christmas The Economist asked the question ÔIs Santa a deadweight loss?Õ. Santa, it seems, distributes resources inefficiently, as many gift recipients value their present at less than its purchase price. I empirically verified this proposition by giving my father a book he already had.

Despite the errors that inevitably occur when guessing somebody elseÕs preferences, The Economist concludes that things are not as they seem, or at least not as they may seem when looking at the world with the assumptions of neoclassical economics. For a start, we donÕt always know what we want and, by someone giving us a gift we would not have bought ourselves, we can discover a hitherto unknown preference. More importantly, though, gifts have symbolic value exceeding their commercial value. They signal the esteem of others, and that in itself may matter more than what lies within the wrapping paper. As the folk wisdom has it, Ôit is the thought that countsÕ.

Bruno FreyÕs Inspiring Economics contains much on these situations where he believes the assumptions of neoclassical economics about rationality and self-interest cannot fully explain behaviour or predict the future. While SantaÕs supposed deadweight loss is simply a case of prices not reflecting the full value of goods, there are lots of so-called ÔanomaliesÕ, psychological propensities that mean that people often donÕt behave the way a neoclassical economic model might predict.

One of these is the Ôavailability effectÕ. People tend to rely dis-proportionately on recent or memorable events. The September 11 terrorist attacks put many people off air travel, even though the statistical chance of being killed driving to your destination would still be higher than dying in a hijacked plane, making it irrational to take the car.

The Ôframing effectÕ occurs when bad results are made to appear good by setting a point of comparison that is even worse. A price rise can be sold as being not as high as it might have been. The Victorian government did this recently by announcing electricity price rises averaging 4-5% ÔgoodÕ because the electricity companies had been requesting increases several times that.

The Ôendowment effectÕ results when people, having bought one thing, feel obliged to buy another. Companies try to define goods as parts of collections, so that consumers buying the first item feel inclined to buy the others to get full value from their initial purchase. Students who are not enjoying their university course may nevertheless continue, because having sunk so much into getting where they are, they might as well keep going to get the degree, even though they would not have done any of the remaining subjects in isolation. This is one reason universities do little to market Ônot-for-degreeÕ subjects, even though these are often more efficient purchases for students.

While these effects, and many others, are often used to criticise neoclassical economics, generally they diminish rather than eliminate predicted price effects. Airline discounting did get some people back into the air after September 11, higher electricity prices have some marginal effect on the propensity to consume power even if they are lower than expected, and people do drop out of university. There is a good chapter criticising this critique of neoclassical economics in Richard PosnerÕs Frontiers of Legal Theory, reviewed in the previous issue of Policy by Michael Rush. Frey understands this counter-critique, and examines in most detail those cases in which prices turn economistsÕ predictions upside down: they diminish supply, creating the Ôcrowding out effectÕ.

Prices work when people are motivated to make or save money. When the motivation is something else, there is a risk that money will crowd it out. A meta-analysis of the crowding out effect, reported on by Frey, found that where workers find their tasks intrinsically interesting, larger extrinsic rewards undermined motivation, where they were perceived as controlling what the worker was doing. Control reduced pleasure in the work itself, despite leading to more money at the end. Where additional rewards, however, are seen as supportive rather than controlling, this can increase intrinsic motivation.

For companies, intrinsic motivation has the great advantage of being cheap, provided salaries imply adequate recognition. It is better in jobs that require creativity, and where employers cannot easily specify all that they want done. Its disadvantage is that employees can focus too much on what interests them, rather than their employerÕs interests.

The benefits and costs of intrinsic motivation are evident in universities. In a 1999 survey most Australian academics said they were intrinsically motivated. This helps explain why many academics work for lower salaries than other professionals receive, and why university administrations interfere little in course design and implementation. It also, however, explains why academics whose intrinsic motivation comes from their research are often not very good teachers. The balance universities have struck between intrinsic and extrinsic motivation does not always serve students well.

Introducing prices can also change the nature of a relationship. Frey cites a case of an Israeli childcare centre that introduced a hefty fine for parents arriving late to pick up their children. The effect was unexpectedÑmore parents were late than before. The reason was that while originally parents felt a moral or social obligation not to keep the childcare workers waiting, by introducing a price the relationship was turned into a commercial one, and extra care was just another service with no social or moral cost.

Inspiring Economics draws on Professor FreyÕs previously published papers, and his Ôpolitical economyÕ sub-heading justifies the inclusion of some chapters better than the main title. The most interesting and original of these chapters is entitled ÔWhat are the sources of happinessÕ. The original argument of this chapter, based on research in FreyÕs home country, Switzerland, is that direct democracy has a positive impact on happiness.

Research into happiness and well-being is a burgeoning academic field, as well as being the subject of centuries of philosophical reflection, countless self-help books and personal trial and error. Very little academic study focuses on politics, perhaps because an activity of little interest to most people is an unpromising place to look for insights into a happy life. International surveys by political scientists find very strong correlations between subjective well-being and democracy, but this is usually seen as happiness being good for democracy, rather than the other way around.

Switzerland relies on direct democracy more than any other country. Frey has a table showing that of the 521 referendums held in the world between 1951 and 1993, 258 were Swiss. The canton-based political structure in Switzerland provides an excellent opportunity for social scientists to compare the effects of variations in democratic participation.

FreyÕs statistical analysis shows that, after controlling for other factors known to affect happiness, the effect of direct democratic rights on happiness is, on average, as large as moving from the lowest income quartile to the second lowest. Such a shift hardly justifies more direct democracy in itself, but does challenge the view that direct democracy puts an added, unwanted burden on apathetic electorates.

Why this relationship exists is not entirely clear. One possibility is simply that it leads to better government. FreyÕs research shows that direct democracy in Switzerland is associated with lower public expenditure (and therefore taxation) would suggest this, from a classical liberal point of view. There are, however, also procedural explanations. Democratic rights are a form of status recognition, and status is linked to well-being. FreyÕs finding that foreigners in Switzerland have lower well-being than citizens is at least consistent with this, though there are other obvious reasons why people away from home may be less happy. Democratic rights may enhance peopleÕs feeling of control, also as we have seen associated with positive outcomes. There is probably something to all these explanations.

Inspiring Economics is a worthwhile example of the benefits of interdisciplinary work, mixing economics, psychology and political science in a way that enhances all three. It is unfortunate that it is published by Edward Elgar, which publishes at prices that neoclassical economics would correctly predict to find few buyers. I hope it comes out in a more affordable paperback.

Review by Richard Grant

Australians and Globalisation: The Experience of Two Centuries
by Brian Galligan, Winsome Roberts and Gabriella Trifiletti
Cambridge University Press, 2001, 217pp, $39.95, ISBN 0 521 01089 6

AUSTRALIANS and Globalisation examines the influence that AustraliaÕs global links have had on its civic and political culture. It is unique in integrating Ôpolitical, legal and constitutional arrangementsÕ to analyse globalisation, in addition to the usual ingredients of economics and trade.

The book maps the historical development of Australian citizenship with particular attention to the relationship between government institutions and an increasingly diverse population. Its main theme is that current debates over the erosion of national powers overlook the past and continuing importance of the Ômultiple political associationsÕ that define Australian citizenship. These have operated at both the transnational and subnational levels.

In the first place, Galligan argues that Australia has always been globalised through its close ties with the British Empire. As late as 1948, Australians called themselves ÔBritish subjectsÕ rather than ÔAustralian citizensÕ.

Secondly, the creation of the Commonwealth was made possible by the existence of the colonies which had stable self governance and strong ties with the British Empire. The authors claim the creation of the Commonwealth developed a mindset that revered the idea of national sovereignty and the unitary citizen, rather than recognising the duality of constraints of a federal system.

By examining the progression of Australian citizensÕ political associat-ions over the past two centuries, the book demonstrates that citizenship has been more broadly based. The recent pressures upon the role of the national government are thereby viewed as part of a much broader historical trend that has always denied the Commonwealth sovereignty in either international or domestic politics.

The approach taken is both original and persuasive. The nation-state was not first, was never sovereign, and was both active and passive in attaining and relinquishing its powers. In this context, the bookÕs themes are manyÑ citizensÕ identifications below and beyond the nation-state, the Ônew world orderÕ of international trade and human rights treaties, the economic challenge of globalisation and the challenge of shaping national identity through the issues of republicanism, reconciliation and multiculturalism. The reference point for all these ideas is the position of the nation-state relative to the identifications of its citizens. Often, however, more ideas were needed to connect these issues.

The links between national identity and economic change, for instance, might have been explained through AustraliaÕs trading relations. Our export markets have been significant beyond their generation of wealth. They have also defined and reflected the nationÕs cultural identity. There is undoubtedly a correlation between the direction and scale of Australian exports on the one hand, and the changing ethnic mix of its population on the other. This has applied not only to the nations we export to, but also the confidence of importers and foreign investors to capture Australian markets. The final chapter needed these sorts of observations. It reads instead as a potted political history of the past 50 years, only loosely tied to the concept of globalisation.

The links between citizenship and Ôglobal economic forcesÕ also needed a closer perspective of the political and economic dynamics in Australia over the past 30 years. The book might have given greater consideration to the connections between citizensÕ current (and prospective) financial position and their varying strength of identification with the Ômultiple political communitiesÕ.

The pressures of globalisation on the nation come not only from the cost-efficiency of other countries. They also emanate from the financial position of citizens. For one part of society, governments remain as crucial as ever. In 2000, more than one in five Australians were dependent on state transfers as their primary source of income. For another part, citizens are free agents, considering the impost of their taxes to outweigh the benefits that they accrue from these. And it is these citizens who provide a dis-proportionate share of the income tax revenue upon which governments depend.

These trends also appear to be significant in terms of Australian citizensÕ involvement abroad. The opportunities from a global economy enable citizens to work abroad, often in countries with more favourable tax regimes. According to figures from the Committee for Economic Development of Australia in 1998/99 permanent departures from Australia reached the highest level since 1973/74. The proportion of these who were Australian-born (49%) was the second highest ever recorded, indicating an increasing trend for the Australian population to emigrate. As with the export of Australian goods and services, emigration is an aspect of globalisation that warrants more attention.

Australians and Globalisation is essentially descriptive in tone, but does make some important judgements. In so far as it recognises the strength of multi-layered citizenship, it lauds the value of a federal system and the benefits accruing from a cosmopolitan society and open economy. While recognising the accelerating pace of change, the underlying argument is of the basic continuity of AustraliansÕ sub-national and supra-national identifications. This is seen as important for handling change. The book is not in any thorough sense an evaluation of the health of AustraliaÕs political institutions, or of citizensÕ changing attitudes toward them. It does provide a welcome perspective to those obsessed with the sudden loss of national sovereignty, and those who fear the decay of AustraliaÕs institutions as a result of a period of intense global interaction.

Review by Wolfgang Kasper

In Defence of Global Capitalism
by Johan Norberg
Stockholm: Timbro 2001 $21.85. 291 pp. ISBN 9 175 66503 4

THIS is the book you always wanted to give to your economically illiterate Greenie nephew or your best friendÕs Pinko wife. The book is written by a young Swede and lapsed anarchist, who had a good look at the anti-globalisation lobbies, found them intolerably repressive, took a fresh look at the facts, and has mounted the most accessible defence of international competition and economic freedom that I am aware of. He writes with the freshness of someone who has only recently discovered how global markets empower ordinary people, and how Third World authoritarians, UN bodies, Eurocrats, protectionists, monopolists, single-issue lobbyists and new-left intellectuals are fighting globalisation for their own selfish ends.

There are many ways to skin a cat and to review a book. Whilst never having skinned a cat, I have tried most ways of reviewing books, except to simply cite the author. This is what I propose to do, in the hope to raise the readersÕ appetite for this splendid book.

Norberg looks at world poverty and finds that Ôthe poor have not, generally speaking, come to be worse off in recent decades. On the contrary, extreme poverty has diminishedÕ (pp. 20-21). ÔMaterial developments in the past half-century have resulted in the world having over three billion more people liberated from poverty. This is historically uniqueÕ (p. 25). Life spans are extending. Infant mortality, illiteracy rates, the incidence of major wars, and the oppression of women are in decline, and the percentage of undernourished people in developing countries has dropped from 37% in 1970 to 18% in 1996 (p. 31). He finds that Ôfamine is caused by dictatorship, not by food shortageÕ (p. 33). And he points to the conditions under which dictatorship can flourish: ÔAt present there are 47 states which are violating basic human rights. Worst among them are Afghanistan, Burma, Equatorial Guinea, Iraq, Cuba, Libya, North Korea, Saudi Arabia, Sudan, Syria and TurkmenistanÑthat is, countries least affected by globalisationÕ (p. 37).

On inequality of incomes and wealth, he asks: ÔIf everyone is coming to be better off, what does it matter that the improvement comes faster for some than for others?Õ (p. 50). Ô . . . [T]he allegation of increased inequality is wrong. In reality, there is much to suggest that equality of liberty also confers economic equalityÕ (p. 83). ÔThe notion of global inequalities having increased is based above all on figures from the UN Development Programme, UNDP . . . the problem with these figures is that they are not adjusted for purchasing power . . . [Yet] the UNDP itself uses purchasing-power adjusted figures in its Human Development Index (HDI) . . . It only resorts to unadjusted figures in order to prove the thesis of inequality . . . Further . . . UNDP omitted its own statistics for the years when inequality declined fastest, 1995-97Õ (pp. 51-53).1 Statistical trickery to prove inequality and poverty, where none exists, are thus not confined to Australian welfare lobbies, as Kayoko Tsumori, Peter Saunders and Helen Hughes pointed out recently in the CIS Issue Analysis paper, Poor Arguments, A Response to the Smith Family Report on Poverty in Australia.

Early in his book, Norberg sets the theme: Ô . . . the most important thing of all is liberty itself, the independence and dignity which autonomy confers on people who have been living under oppressionÕ (p. 23). He now praises capitalismÑsecure property rights, free contracts and a government that does not play favourites all the time. ÔBill Gates and Madonna earn millions . . . by offering software and music which a lot of people think are worth paying forÕ (p. 59).

He attacks border controls most passionately, and he has his former anarchist and Green anti-globalisation mates in his sights, when he argues that Ôfree trade is by nature fair trade because it is based on voluntary cooperation and exchangeÕ (p. 108). ÔFree trade and mobility . . . make the poor richer and the rich also richer, but the rich do not grow richer as fast as the poor doÕ (p. 128). Dick Smith and the Buy-Australia lobby should read pages 108-120, where Norberg highlights masterfully the absurdity of self-sufficiency. Trade ministers should likewise read these pages: ÔPoliticians say that they will consent to reduce a tariff only on condition that others do the same. This is fundamentally irrational, because we ourselves benefit by reducing our tariffs and being able to import cheaply . . . Õ (p. 116).

On the environment, Norberg draws on that other Scandinavian rebel against blind left beliefs, Bj¿rn Lomborg, whose book was reviewed by Richard Stone in the Summer 2001-02 issue of Policy. ÔPollution does not increase at all with growth, instead it presents an inverted U-curve . . . when prosperity has risen enough, the environmental indicators show an improvement insteadÕ (p. 215). Ô . . . [C]ertain of the raw materials we use today . . . would not suffice for the whole of the world if everyone consumed the same things. But that information is just about as interesting as if a prosperous Stone Age man were to say that, if everyone attained his level of consumption, there would be not enough stone, salt and furs to go roundÕ (pp. 218-219).

Of the Tobin tax on foreign-exchange transactions, that fad of the anti-globalists, he writes that it Ôwill lead to a general reduction of the return on capital, and it will cause capital-starved countries to have less access to capitalÕ (p. 239). ÔThe small tax which is sufficient to disrupt the everyday, healthy functioning of the financial market would not be sufficient to prevent [major exchange-rate speculation]Õ (p. 241). Like so many ideas that anti-globalisation groups such as the anti-trade Attac movement, are promoting on the internet, the Tobin tax would hurt the poor in third world countries. Paradoxically, they would damage the environment out of continuing poverty and an inability to invest in conservation. The Tobin tax only makes sense when you become aware that UN bodies would harvest as much as US$ 100bn in revenue (p. 242). Not surprisingly, this lapsed and sceptical anarchist has come to the conclusion: ÔLiberalise, DonÕt Standardise!Õ (p. 261).

Postscript Johan NorbergÑand publisher Timbro, the leading free market think tank in SwedenÑwon the prestigious Antony Fisher International Memorial Award for In Defence of Global Capitalism in April 2002. The annual Fisher awards are named after Atlas Economic Foundation founder, Antony Fisher, who dedicated his life to the defence of freedom and liberty. The book may be purchased from www.globalcapitalism.st and www.laissez-faire.com.

Review by Peter Taft

Elections: Full Free and Fair
Edited by Marian Sawer
The Federation Press, 2001, Sydney, 256pp, $38.50, ISBN 1 86287 395 X

FULL, Free and Fair? As the reader progresses, it is clear that the omission of the question mark from the bookÕs title is deliberate. The collection of 14 papers seeks to demonstrate that elections in Australia can generally be considered full (the universal franchise), free (few impediments to voting or running for office) and fair (the result represents the votersÕ intent)Ñat least by international standards.

The book is not a light read; the text is dense and the illustrations spasmodic. Its appeal will be to the reader with at least a basic background in electoral politics, as well as to students keen to flesh out the detail of particular themes in Australian electoral history. Those with a more general interest in political history may find much of the content at a depth beyond their needs, or may choose to limit themselves to particular chapters of interest.

Four broad themes are coveredÑthe development of the electoral process in Australia, current issues with the process, the evolving role of the Australian Electoral Commission, and how AustraliaÕs democratic institutions rate in an international context. The whole combines to leave the reader impressed with AustraliaÕs role as a pioneer in the development of democracy and electoral machinery, more aware of some key issues, but concerned at the potential for interference in the system for partisan purposes.

The early chapters show how colonial Australia was an incubator for electoral reform ideas, some of which were subsequently taken up in Great Britain and elsewhere across North America and Europe. These chapters contain a number of engaging stories (for example, about the Chartist movement), anecdotes, and characters. Among the latter are Charles Jardine Don, an MP who worked as a stonemason during the day and as a member of the Victorian Legislative Assembly at night, and a certain Henry Richard (HR) Nicholls, who was, Ôpart of an intellectual coterie that dabbled in socialism, internationalism, republicanism and secularismÕ. His Ôradical creed underpinned by atheismÕ, Nicholls played a leading role in a Ômovement that culminated in the rebellion at EurekaÕ. One can only marvel at the extraordinary road to Damascus that Nicholls must have travelled in subsequent years, judging by the views of his modern day followers!

Current issues dealt with include enfranchisement (for both voters and candidates), the payment of politicians, the funding of elections, voting systems, and types of voting systems. Two key issues, compulsory voting and the use of proportional representation (PR), are given due consideration, given their place as longstanding issues of contention.

In her chapter, Lisa Hill addresses an important and often overlooked issueÑdo we really have compulsory voting, or just compulsory registration and attendance, since we can choose to cast an invalid vote? She notes that such Ôcompulsory votingÕ has popular support in Australia, and that arguments against it are mostly negated by the fact that casting a valid vote is not compulsory, that attendance once every few years is hardly a chore for most and that the Australian Electoral Commission (AEC) rarely prosecutes unreasonably if attendance has not been possible. Hill gives most space to the virtues of compulsory voting in terms of the validity of the subsequent mandate, and argues that compulsory voting is actually good for people of marginal socioeconomic status (and not just for those they vote for). In my view, Hill overplays this point. The benefits she claimsÑthe greater civic involvement of the otherwise marginalisedÑstems from near universal adult enfranchisement, rather than compulsion.

Judith Homeshaw surveys the development of PR in Australia, and notes the support it has received in a number of jurisdictions such as Tasmania and the ACT (and internationally, Ireland and Malta) in the face of opposition by major political parties. There is little in the chapter (nor indeed, elsewhere in the book) extolling the virtues of PR over single member electorates in giving effect to the wishes of the people. Supporters of the free market may care to reflect on the view of Milton Friedman that the beauty of the market is that it represents the true proportional representation of consumer choiceÑthe logical corollary being that proportional representation represents the true market of voter choice. The opposition by major parties to PR is analogous to the role of producers in seeking to maintain monopolies or oligopolies, thereby limiting consumer choice.

Other chapters in the book make interesting reading without producing earth-shattering conclusions. The reader can learn about the increasing importance of preference flows (the 2001 Federal election, after the bookÕs publication, would provide a counter-example to this thesis). Also covered is the Australian Electoral CommissionÕs extensive contribution to democracy in the region, the history of the maintenance of electoral rolls, the accessibility of voting facilities and the integrity of the count. Chapters on female and indigenous Australian participation in the process are provided. Almost inevitably, the ubiquitous constitutional historian Helen Irving pops up to praise the foresightedness of the framers of the Constitution in ensuring democratic electoral provisions.

Two chapters towards the end of the book place the Australian experience in an international context, and in doing so add considerably to the academic nature of the tome. Arend Lijphart provides a quantitative analysis of Aust- ralian democracy, focusing on its federal and ÔmajoritarianÕ (broadly, the power of an Executive to govern) characteristics. AustraliaÕs similarity to Canada and the US will surprise few educated readers. Pippa Norris surveys public confidence and pride in Australian political institutions, and contrary to what we might perceive from the media, finds that Australians rank their institutions relatively highly. Another interesting finding is that compared to other federations, Australians were less dissatisfied about the power of the central government, and that dissatisfaction actually fell slightly between the mid-1980s and mid-1990s. While Australians rank highly the ability of their politicians to keep promises (a ranking boosted by the number of post-communist Eastern European states surveyed), they are relatively less highly trusting of public servantsÑa sobering thought for my fellow Canberrans.

In the bookÕs final chapter, Jupp and Sawer survey how the development of the party system influenced the development of the electoral mach-inery, cutting across a broad range of themes covered earlier in the book, such as enfranchisement and voter compulsion, along with other issues such as campaign financing and electoral fraud. They conclude that the merits of the Australian democratic structure had been tempered by the overt influence of major parties, in that the characteristics of the main players in the system (professional males from the majority culture) have barely changed over time. The key to improving the democratic structure lies in encouraging internal diversity within the parties (for which Jupp and Sawer give credit to the minor parties) and to more stringent control over party access to finance.

A book of limited length will inevitably leave out some events and issues. In the last quarter century, a number of events of relevance to the notions of fairness in the electoral system have occurred. These include a tied vote (Nunawading in the Victorian Upper House), changes to the constitutional provisions for the replacement of Senators, an election characterised by a high informal vote (1984 Federal election) and the introduction in nearby New Zealand of a mixed member proportional system. Of particular interest to some is the ability of parties to form government without even receiving more than 50% of the two- party preferred vote (1998 Federal election).

Some discussion of these in the relevant chapters would have added to the bookÕs pertinence. Already in 2002 the issues of the powers and voting system of the Senate, and the length of parliamentary terms, have arisen. Others, such as compulsory voting, do so from time to time. For those seeking to put such issues into context, this volume would provide a more than useful primer.

Review by Sarah Tyrell

The Precautionary Principle: A Critical Appraisal of Environmental Risk Assessment
By Indur M. Goklany
Washington, DC: Cato Institute, 2001, 119 pp, $us 17.95 ISBN 1 930 86516 3

THE precautionary principle has become an established component of international environmental forums and the spirit of the principle is increasingly evident in national environmental policymaking and judicial decisions. It has enjoyed great success among environmentalists and bureaucrats, who revel in its wide-ranging interpretations which can be selectively applied to suit almost any situation.

The basis of the precautionary principle is the fundamental idea of inter-generational equityÑthat the need to conserve biodiversity should be the basic constraint on all activity so as to ensure that the current generation can leave a no-less impoverished environment to future generations A widely-used and popular definition of the precautionary principle can be found in the Wingspread Declaration:

When an activity raises threats of harm to human health or the environment, precautionary measures should be taken even if some cause and effect relationships are not established scientifically. In this context, the proponent of the activity, rather than the public, should bear the burden of proof.1

The argument appears compelling. The basic principle of inter-generational equity is a sound moral principle that few would seek to question. Many peopleÑenviron-mentalists and othersÑfavour the ÔabsolutistÕ requirements of the precautionary principle where no consideration for the social or economic costs of an activity is made. Others note that there never can be absolute certainty or safety and that it is irrational to apply the pre- cautionary principle, which also limits technological progress. Such limitations are counterproductive in achieving the ultimate goal of wisely using and protecting our natural resources.

Indur Goklany, however, does not seek to enter the debate regarding the rationality of the precautionary principle but assumes it as a viable means of policymaking. He concerns himself with the application of the principle in solving various public health and environmental dilemmas. As one of AmericaÕs leading authorities on risk assessment, Goklany applies risk assessment to the specific environmental issues of DDT, genetically modified (GM) crops and global warming. The bookÕs aim is to evaluate and develop policies for the three case studies to ensure that they do not ultimately cause more harm than good.= Goklany identifies six hierarchical criteria to construct a precautionary framework for formulating policies where an action could lead to uncertain benefits and uncertain harms (or costs) to public health and the environment. These criteria are:

1 Threats to human health, especially the threat of death, should take precedence over threats to the environment.

2 More immediate threats should be given priority over threats that could occur later.

3 Threats of harm that have a higher certainty should take precedence over those that are less certain.

4 For threats that are equally certain, more weight should be given to those that have a higher expected costÑwhich might be measured in expected deaths or lost biodiversity, for instance.

5 If the technology is available to adapt to the adverse consequences of a policy, the harm can be discounted to that extent.

6 Irreversible or persistent potential harms should be given greater priority over temporary or reversible ones.= As Goklany works through each case study, he applies each criterion to the various sets of public health and environmental consequences of the action under review. Whilst this sounds reasonably straightforward, problems arise due to critical factors not remaining constant, therefore often requiring the application of several criteria simultaneously. Consequently, there are instances where no cut-and-dried answer is readily apparent.

The debate regarding the use of DDT has seen a revival in recent times. In the Spring 2001 issue of Policy, Dr Roger BateÕs article, ÔMalaria and the Anti-DDT CampaignÕ, explored links between reduced use of DDT and increases in the occurrence of malaria. Goklany systematically applies each criterion to evaluate whether a global DDT ban would be consistent with the precautionary principle and whether it would make sound global policy for minimising overall public health and environ-mental risks. His consequent analysis draws a clear distinction between the use of DDT in the developed and the developing world. His conclusions are that calls for a global ban on DDT are based on selective application of the precautionary principle and that the far more immediate risks of such a ban are ignored. He argues that there is justification for a ban on DDT use in developed countries. Any such ban in the developing world, however, would adversely affect economic development and add to the numbers of malaria deaths. Goklany, like Bate, concludes that indoor spraying within homes at risk of malaria saves untold lives whilst minimising impact on the environment.

After DDT, the controversial issue of genetically modified crops is assessed. Agriculture is perhaps the human activity which has had the single greatest effect on world biodiversity and on human well-being. As the worldÕs population grows, demand for agricultural and forest products will inevitably grow with it. The challenge of providing for this increased demand for food whilst minimising the environmental impact can potentially be addressed through the use of bioengineered crops. A comprehensive array of figures is given to espouse the benefits of bioengineered crop technology. For instance, Ôif through the widespread adoption of biotechnology, agricultural productivity increased by half a percent per year, cropland could actually be reduced by 98 million hectares rather than increased by 325 million hectares whilst meeting the food demand for a larger and richer population.Õ

The obvious public health benefits of crops are the increase in food supplies but not so obvious are the benefits in improving the nutritional quality of such food. Billions of people still suffer from undernourishment, malnutrition and other ailments attributable to insufficient food or poor nutrition. For instance, nutrient enriched crops such as the Swiss-engineered Ôgolden riceÕÑrich in betacarotene and ironÑcould have significant impact in reducing vitamin A and iron-deficiency related deaths prevalent in developing nations.

The interesting point made in the discussion of applying the pre-cautionary principle to GM crops is that those who cite it as a justification of prohibition do not then take responsibility for the concomitant risks of such a ban. The Universal Declaration of Human Rights (1948) recognises the right of everyone to Ôan adequate standard of living including food, clothing and housingÕ. Further to this, the Universal Declaration on the Eradication of Hunger and Malnutrition (1974) specifies that every person Ôhas the unalienable right to be free from hunger and malnutritionÕ (p. 56). This basic human right to food and nutrition is cast aside by those who seek only to take credit for potential risks to health or the environment rather than calling for research, development and commercialisation of GM crops with a reasonable amount of caution.

Goklany does not ponder whether global warming is happening, likely to happen or not happening, but instead focuses on the public policy issue of the impact of climate change. The attempted control of greenhouse gas (GHG) emissions via such initiatives as the Kyoto Protocol has great potential to aggravate hunger, reduce public health services, increase mortality and retard economic growth. Forcing the pace of GHG reductions will not guarantee net benefits to public health, or the environment, nor will it have a positive effect on reducing climate change. There is far greater certainty of the negative effects of GHG reductions in lower economic growth and greater poverty, primarily for the poorest and most desperate people of the world.

The book is a further addition to the numerous works Indur Goklany has already produced on the subject. Such a topic often risks being excessively dry and academic but this slender volume is packed with facts and presents a detailed analysis of each issue in a clear and easy to follow fashion. His provocative and incisive critique of the precautionary principle is sure to raise the hackles of many readers but it is a must read for policymakers and environmentalists alike.

Endnotes
1 C. Raffensperger and J. Tickner (eds), Protecting Public Health and the Environment: Implementing the Precautionary Principle (Washington, DC: Island Press, 1999).

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